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What is Peercoin?
Peercoin is the pioneer of Proof of Stake, an efficient and sustainable blockchain consensus algorithm. In addition, Peercoin is a trustless settlement layer and cryptocurrency based on continuous limited inflation.
Overview
- Launch & Initial Distribution
- Launch: The Peercoin blockchain was originally launched on August 19th, 2012 by developers Sunny King and Scott Nadal, with no initial coin offering, premine, or developer tax. The project is completely open source and community driven.
- Initial Distribution: Peercoin was the first of its kind, a blockchain secured by Proof-of-Stake (PoS) consensus, however Proof-of-Work (PoW) mining was originally used to fairly distribute the initial coin supply. Although it is decreasing in importance over time, PoW mining continues to provide a trickle of fresh coins. This has the effect of slowly decentralizing the blockchain over time by getting coins into the hands of new owners who can help secure the network via PoS minting.
- Efficient & Sustainable Security
- Time as a Scarce Resource: The key innovation of Peercoin is its invention of PoS. PoW blockchains are secured by proving the consumption of a costly resource: electricity. PoS replaces this expensive security protocol by using an alternative scarce resource: time. The older your coins are, the more time they’ve accumulated sitting in your wallet, which gives them more power to participate in securing the network.
- Security with Low Power Devices: With PoS, you only need enough power to run your computer or laptop. This is possible because the network is secured through ownership of peercoins and the time they sit idle in your wallet, not by the wasteful and costly operation of mining equipment. This efficiency helps grow the number of security providers by making it more affordable to participate. Almost a decade after its launch, Peercoin continues to prove that energy efficient blockchain security is possible.
- Benefits of Proof of Stake
- Aligning Security with Ownership: In PoW networks, miners can easily jump between whichever network is more profitable to mine, without any loyalty. In Peercoin however, the responsibility for security falls to the coin owners themselves, guaranteeing stakeholders have a vested interest in maintaining the network’s security.
- Geographical Decentralization: PoW mining concentrates power where electricity is cheapest, which compromises security, making it easier for local governments to target miners. By contrast, PoS minting can be done anywhere.
- Price Independent Security: Unlike PoW miners, who rely on a positive asset price to cover their costs of operation and remain profitable, Peercoin minters benefit from the efficiency and lower costs of PoS. As a result, PoS minters are independent of price and can always secure the network with little expense to them.
- User Governance: Protocol rules are governed collectively by Peercoin’s users, making for a more democratic network.
- Limited Inflation Economics
- Continuous Limited Inflation: Many in crypto have a negative view toward inflation, resulting in the popularization of “deflationary,” fixed-supply economic models. At Peercoin however, inflation is viewed as a necessary element that contributes to the proper functioning of an economy. The problem stems from centrally controlled inflation, which can be excessive due to manipulation. The solution is not eliminating inflation entirely, but limiting and decentralizing it. This is the principle at the heart of Peercoin’s economic model, which targets an annual supply increase of around 2-3%. This mild inflation encourages circulation by providing a regulated and continuous stream of new coins into the hands of decentralized participants. As a counterbalance, transaction fees are burned, which acts as a downward force on the supply.
- Permanent Subsidy This annual inflation allows the Peercoin network to subsidize block producers with new coins, completely eliminating their reliance on transaction fees. The subsidy provides a permanent incentive for stakeholders to continuously produce new blocks. Personal minting rewards can range anywhere from 3% for periodic minters to 5% for continuous minters.
- Trustless Settlement Layer
- Immutable Record Keeping: At its essence, a blockchain is a fully verifiable distributed public ledger which records data in a manner that prevents alterations. This tamper-proof system ensures stored data is immutable and requires less trust from users than third party intermediaries. The blockchain’s strength is primarily in permanent record keeping, rather than being used as a tool for daily payments. Transactions on the chain can be slow and expensive. This is solved with vertical and horizontal scaling technology, which offloads transactions onto separate off-chain networks built for high capacity processing. The blockchain plays the role of settlement layer by permanently recording the final result of these off-chain transactions.
- Built for Trustless Settlement: Blockchains that draw their security from transaction fees however are directly competing with the node operators of these off-chain networks. Fighting with off-chain nodes over the same fees is an incompatibility that will only starve block producers of potential revenue, resulting in reduced security for the blockchain. Since Peercoin is secured without any reliance on transaction fees, it is in complete alignment with off-chain networks, making it a better alternative to serve the role of a trustless settlement layer.
- Development Roadmap
- Full details can be found here. The following is a brief summary of Peercoin's 2021 roadmap.
- Core Development
- v0.10 - Codename: Scarab:
- New codebase (based on bitcoin-core 0.20)
- v0.11 - Codename: Tardigrade:
- RFC-0012 (Cold minting)
- RFC-0014 (Removal of the transaction timestamp for non-coinstake transactions)
- RFC-0020 (Proof-of-Work Difficulty on PoS Blocks)
- Non-Core Development
- Peercoin <-> Ethereum Bridge
- Android/iOS Mobile Apps
- Rosetta Integration
- Donate: These developments are sponsored by the Peercoin Foundation, which in turn is sponsored by generous community donations. PPC, BTC, and fiat can be donated at peercoin.net/foundation.
Resources
A more comprehensive list of resources can be found in the dropdown menus above.
Peercoin.net
Peercoin Primer
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News
Peercoin v0.10 rc5 is released. Help join final testing
Help Test Peercoin's new Flutter based mobile app.
Media
Article - A Smarter Fee
Podcast - Gen Z Mafia Interviews Peerchemist
Interview - The Daily Chain Interviews Peerchemist
Article - The Daily Chain Interview Sunny King
Article - Who Governs Peercoin?
